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2023 (2) TMI 341 - AT - Income TaxAdditional depreciation u/s 32(1)(iia) - assessee’s claim for 50% initial depreciation u/s 32(1)(iia) of the Act amounting to Rs.14,93,45,096/- in respect of new plant and machinery purchased and installed in the preceding year but put to use for a period of less than 180 days in that year - HELD THAT:- As decided in assessee own case [2017 (9) TMI 962 - ITAT KOLKATA] assessee is entitled to claim remaining 50% depreciation of such 20% which is equal to the actual cost of new plant and machinery, accordingly ground no-I raised by the assessee is allowed. TP adjustment in relation to specified domestic transactions of transfer of power for captive consumption by eligible units to non-eligible units - Deduction u/s 80IA in respect of thermal power plants for generating electricity - profits and gains of such eligible business shall be computed as if the transfer has been made at Arm’s Length Price ('ALP’) - ALP as mandated in Section 80IA of the Act, the assessee was show-caused as to why the same price computed by the assessee not been rejected as it cannot supply power at that rate in open market being a manufacturer and not a distributor - HELD THAT:- As decided in M/s. Dhunseri Ventures Ltd. [2022 (8) TMI 1342 - ITAT KOLKATA] no force in the contentions of the Id DR that rate at which the power was sold to unrelated parties by the CPP is the ALP. We also note that decision of the Calcutta High court in the case of CIT Vs ITC [2015 (7) TMI 450 - CALCUTTA HIGH COURT] which was relied by the TPO/AO and the functional dissimilarity between CPPs and SEB have been considered by the coordinate bench of the tribunal in the case of Star Paper Mills Ltd [2021 (11) TMI 1 - ITAT KOLKATA]. Therefore, we are inclined to uphold the order of Ld. CIT(A) by holding that the ALC at which the power is procured by non-eligible units from SEB is the most appropriate ALP to bench mark the specified domestic transactions and accordingly the order passed by Ld. CIT(A) is upheld by dismissing the revenue's appeal on this issue. The grounds of appeal pertaining to this issue are dismissed. Nature of receipts - compensation paid for obtaining limestone connected to mining activity - HELD THAT:- We find that this Tribunal in assessee’s own case for AY 2011-12 & 2012-13 [2022 (10) TMI 1151 - ITAT KOLKATA] as held payment of compensation to persons whose rights are infringed by the mining activity is revenue in nature. Treating of industrial promotion assistance from the State Government as capital receipt - HELD THAT:- As decided in assessee own case subsidy in question is a capital receipt and not chargeable to tax. Claim of interest subsidy from the State Government as a capital receipt - HELD THAT:- As decided in assessee own case AY 2010-11 [2017 (9) TMI 962 - ITAT KOLKATA] interest subsidy is to be treated only as a capital receipt and accordingly the grounds raised by the assessee in this regard are allowed. Disallowance u/s 14A read with Rule 8D - As per assessee AO should have accepted the disallowance offered by the assessee u/s 14A of the Act and he erred in invoking and applying Rule 8D - HELD THAT:- We find that this Tribunal in assessee’s own case for AY 2011-12 & 2012-13 [2022 (10) TMI 1151 - ITAT KOLKATA] dealt with this issue of disallowance u/s 14A of the Act and decided in assessee’s favour consider all investments (excluding investments in subsidiary companies) which yielded dividend income to the assessee for computing disallowance u/s 14A of the Act r.w. Rule 8D of the Rules. MAT computation - whether subsidy/incentives being capital receipts needs to be excluded from the book profit u/s 115JB of the Act? - HELD THAT:- Since the issue stands squarely covered by the Hon'ble Jurisdictional High Court in the case of Ankit Metal and Power Limited [2019 (7) TMI 878 - CALCUTTA HIGH COURT], we fail to find any infirmity in the finding of ld. CIT(A) holding that the subsidy/incentive received by the assessee which have been held to be capital receipts are to be excluded from the book profit u/s 115JB. Addition of provision for sick leave, which was written back and credited to P&L A/c, while calculating book profit u/s 115JB - HELD THAT:- The appellant identified transitional liability on account of provision of sick leave but in terms of Accounting Standards-2015 (Revised) the said provision was not debited to profit and loss account but directly adjusted against the balance in general reserve. Thus, the claim was neither debited to profit and loss account nor claimed as deduction from the book profit. Under these facts and circumstances, we hold that the claim of the assessee of excluding the provision for sick leave written back was justified. Thus, no interference is called for in the finding of ld. CIT(A). Thus, ground no. 8 raised by the Revenue for AY 2013-14 is dismissed. Upward adjustment made to book profit for disallowance computed u/s 14A r.w. Rule 8D of the Rules - HELD THAT:- We find that this Tribunal in assessee’s own case for AY 2011-12 & 2012-13 dealt with this issue and decided in assessee’s favour [2022 (10) TMI 1151 - ITAT KOLKATA] wherein we fail to find any infirmity in the finding of ld. CIT(A) in deleting upward adjustment made to book profit for disallowance computed u/s 14A r.w. Rule 8D of the Rules. Education cess being claimed as an expenditure u/s 37(1) - HELD THAT:- We fail to find any merit in this ground raised by the assessee, since the claim of deduction in the nature of education cess has been decided against the assessee by this Tribunal in the case of M/s. Kanoria Chemicals & Industries Ltd. [2021 (10) TMI 1153 - ITAT KOLKATA] and also in light of the retrospective amendment made by the Finance Act, 2022 inserting Explanation 3 to Section 40 of the Act as per which education cess cannot be claimed as expenditure. Therefore, common ground no. 1 raised by the assessee for AY 2013-14 & 2014-15 is dismissed. Deduction of provision made for leave encashment and the allowability of the deduction u/s 43B(f) of the Act for the amount actually paid - HELD THAT:- As respectfully following the finding of the Tribunal applying the ratios laid down by Hon'ble Supreme Court of India in the case of Exide Industries Limited [2020 (4) TMI 792 - SUPREME COURT] we are of the considered view that the issue needs to be remitted back to the file of ld. AO who shall allow the claim of leave encashment actually paid by the assessee during the AY 2013-14 & 2014-15.
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